TaxTMI 
TaxTMI 
2022 (3) TMI 1191
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....)] Mumbai dated 28th February, 2019. 03. Similarly, in ITA No.3037/Mum/2019 is for Assessment Year 2014-15, wherein the penalty under Section 271D of the Act levied by the Assessing Officer of Rs.1,17,23,991/- is also stands deleted by the CIT(A)-49, Mumbai dated 12.02.2019. 04. Therefore, the LD Assessing Officer is aggrieved with that and has preferred both these appeals. 05. The grounds of appeal raised by learned Assessing Officer are as under :- for Assessment Year 2014-15 "1. Whether on the facts and circumstances of the case and in law, the Hon'ble CIT(A) is justified in deleting the penalty of Rs.1,17,23,991/- under section 271D holding that there was reasonable cause under section 273B for entering on transaction to transaction basis the given case for the existence of reasonable cause under section 273B which led to the exigency of contravention of provisions of Sections 269SS/ ST? 2. Whether on the facts and circumstances of the case and in law, the Hon'ble CIT(A) is justified in holding that the journal entries should enjoy equal immunity on part with account payee cheques and bank drafts? 3. whether on the facts and circumsta....
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....oans were not taken through an account payee cheque or account payee bank drafts, According to the ld AO, assessee has violated the provisions of section 269SS of the Act and therefore liable to penalty with respect to loan taken from four different group entities amounting to Rs.1,05,50,385/-. 08. Therefore, learned Jt. Commissioner of income tax [the LD Adjudicating Authority] issued show cause notice to the assessee on 29 July 2016. 09. Assessee filed a submission stating that assessee has not accepted any loan as well as there is no violation of provisions of section 269SS of the Act. Assessee also submitted raised several judicial precedents before the learned Adjudicating Authority. The learned Adjudicating Authority rejected the contention of the assessee and held that there is a violation of Provisions of Section 269SS of the Act and in absence of any reasonable cause, the assessee is exposed to the penalty under section 271D of the Act equivalent to the amount of loan. Accordingly, the penalty order under section 271D was passed on 30th September, 2016 levying the penalty of Rs.1,05,36,585/-. 010. The assessee preferred the appeal before the learned CIT (A) who pa....
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....t entries as detailed above, were duly allowed as deduction by the ld. AO. After the completion of assessment, the ld. AO forwarded the papers to the ld. Addl. CIT for initiating penalty proceedings u/s.271D of the Act, as, in his opinion, the aforesaid adjustment entries were passed by way of journal entries which are in violation of provisions of Section 269SS of the Act. Accordingly, the ld. Addl. CIT proceeded to levy the penalty u/s.271D of the Act amounting to Rs. 66,01,707/- being the value of credit entries of the transactions with aforesaid three parties. The assessee submitted that there is no violation of provisions of Section 269SS of the Act in respect of the aforesaid transactions. It was specifically pointed out that the assessee had passed journal entries for creation / assigning of debt and liabilities and that the creation / assigning of debt and liabilities vide journal entries does not attract the provisions of Section 269SS of the Act. The ld. CIT(A) gave a categorical finding that this is not a case of loan or deposit taken or repaid and that it is only a case of assigning of receivables. The ld. CIT(A) observed that M/s. HT Media Ltd. (HTML) entered into an a....
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....held that the transactions through journal entries are also hit by the provisions of 269SS and 269T of the Act. The decision of the Hon‟ble Bombay High Court rendered on 12/06/2012 is significant and prior to this judgment, there were series of consistent decisions on Sections 269SS and 269T of the Act holding that mere passing of journal entries will not amount to receipts / payments otherwise done by account payee cheques or draft and accordingly, the same were not in contravention of provisions of 269SS and 269T of the Act and consequently no penalty u/s.271D and 271E of the Act could be levied for the same respectively. The Hon‟ble Jurisdictional High Court held that the reliance placed on these series of consistent decisions of 269SS and 269T of the Act constituted reasonable cause and accordingly, it held that though journal entries fall within the ambit of provisions of 269SS and 269Tof the Act, still in view of series of consistent decisions rendered on the said subject, the Hon‟ble High Court held that the same would constitute reasonable cause within the meaning of Section 273B of the Act as assessee was made to believe by way of series of decisions rend....
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....osition of the person concerned, to come to the conclusion that the same was the right thing to do." Thereafter, the ld. CIT(A) also placed reliance on the decision of the Jurisdictional High Court in the case of Ajinath Hitech Builders Pvt. Ltd, and others (Group company of the assessee) dated 06/02/2018 in ITA Nos. 171, 172, 202, 203, 218 & 2019/Mum/2015 wherein it was clearly held that since the decision of the Hon‟ble Bombay High Court in the case of Triumph International Finance (I) (345 ITR 270) was rendered on 12/06/2012, it is to be held for prior to that, the assessee was under a bonafide belief that the transactions through journal entries were not hit by the provisions of Section 269SS and 269T of the Act. Hence, there was a reasonable cause available to the assessee within the meaning of Section 273B of the Act. The ld. CIT(A) also gave a categorical finding that neither the ld. AO nor the Addl. CIT (who levied the penalty) had made out a case of any malafide intention on the part of the assessee nor any adverse finding has been brought on record with regard to journal entries passed by the assessee in its books for adjustment / assigning of receivables. According....
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....idered opinion, this business constraint and exigency and administrative convenience itself constitutes reasonable cause within the meaning of section 273B of the Act . Hence no penalty u/s 271D and 271E of the Act could be invoked for the same. In this regard, we find that the Hon‟ble Jurisdictional High Court had addressed the similar issue whether the aforesaid behaviour of the assessee would constitute reasonable cause u/s 273B of the Act to escape from the rigors of applicability of provisions of section 269SS and 269T of the Act in the case of CIT vs Triumph International Finance (I) Ltd reported in 208 Taxman 299 (Bom). The relevant operative portion of the said decision is reproduced hereunder:- "23. The expression 'reasonable cause' used in Section 273B is not defined under the Act. Unlike the expression 'sufficient cause' used in Section 249(3), 253(5) and 260A(2A) of the Act, the legislature has used the expression 'reasonable cause' in Section 273B of the Act. A cause which is reasonable may not be a sufficient cause. Thus, the expression 'reasonable cause' would have wider connotation than the expression 'sufficient ca....
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....of Section 273B of the Act, no penalty under Section 271E could be imposed for contravening the provisions of Section 269T of the Act. 3.7. We also find that the Hon‟ble Delhi High Court in the case of CIT vs Worldwide Township Projects Ltd reported in 229 Taxman 560 (Del) in the similar set of facts and circumstances had categorically observed as under:- " 8. A plain reading of the aforesaid Section indicates that (the import of the above provision is limited) it applies to a transaction where a deposit or a loan is accepted by an assessee, otherwise than by an account payee cheque or an account payee draft. The ambit of the Section is clearly restricted to transaction involving acceptance of money and not intended to affect cases where a debt or a liability arises on account of book entries. The object of the Section is to prevent transactions in currency. This is also clearly explicit from clause (iii) of the explanation to Section 269SS of the Act which defines loan or deposit to mean "loan or deposit of money". The liability recorded in the books of accounts by way of journal entries, i.e. crediting the account of a party to whom monies are payable or d....